An NBDA Publication

April 1, 2007 Vol. 16, Number 5 Santa Fe Shops Defy Traditional Sales Models Specialty Bike, BY MATT WIEBE meticulous, individualized service and small retailers in the past few months. SANTA FE, NM—Fewer bike brands component advice—your shops have Frank Sotomayor opened Frankie Flats, Sports Chains that control a growing share of the arrived. which focuses on service, and David market and fewer shops in business “I see myself as brokering artistic Meredith opened One Ghost to focus Deliver Dollars that support fewer suppliers are classic bike parts to my customers,” said David on downhill jump bikes. examples of industry consolidation. Bell with tongue fi rmly in cheek. Bell But Santa Fe, a city of 70,000 resi- BY MATT WIEBE But swimming against this current is owns Mellow Velo in Santa Fe, New dents, is also home to three large tra- Success in the bike business in 2006 a new wave of retailers that are develop- Mexico. ditional bike shops. When added to the depended on which chan- ing niche businesses to serve customers Customers who walk into Bell’s 500- three above—that’s one bike shop per nel of trade you did falling through the cracks of traditional square-foot shop can choose from rims 11,667 people. your business in. generalist bike shops. in 13 colors, and track cogs polished to What’s happening in Santa Fe could Shipments to mass A high school fi xed-gear rider look- jewelry-like levels. Santa Fe is, aft er all, be happening across the nation, given retailers were down ing for pink deep-dish rims to person- the third largest art market in the na- the segmentation of the market into overall, close to 8 alize their ride, a 45-year-old looking tion. diff erent categories including urban percent, whereas to enter the big-hit world for the fi rst Bell, whose store has been open just suppliers to sporting time or a longtime cyclist looking for over a year, was joined by two other Continued on page 34 goods and bike shops saw business increase by the same amount. Bicycling Gains Traction in New Congress Bill Austin summed up supplier BY LYNETTE CARPIET email informing him that she decided confi dent that other meetings will have sales to bike dealers succinctly: “Units WASHINGTON, D.C.—Raleigh’s to co-sponsor the Bicycle Commuter an eff ect, too.” and dollars were up, as was the average Reed Pike knows fi rsthand that more Tax Benefi t Act. Andy Boyland, owner of three Cycle selling price. It was a good year for sup- lawmakers are willing to work with the “We had meetings with a number of Craft stores in New Jersey, agreed. “I pliers,” Austin said. Austin is Raleigh bicycle community to make cycling a representatives in the Washington dele- thought we got pretty good reception USA’s chairman and chief executive valid mode of transportation. gation and they all went very well,” said from all,” he said, adding that he had Just a day aft er meeting with Sen. Pike, Raleigh’s director of marketing, a challenging schedule covering meet- Continued on page 36 Maria Cantwell’s (D-WA) legislative who has attended the Summit on two ings with Congress members from New correspondent on Capitol Hill at the other occasions. “We’re particularly ex- York, New Jersey and Pennsylvania. Regional Shows National Bike Summit, Pike received an cited about this one success, but we’re Boyland, a fi rst-time attendee, met with Rep. Steven Rothman (D-NJ), who was pulled out of an appropria- Find Supporters tions meeting to greet his delegation. “Partly it was because he’s my wife’s Vary by Market cousin, so it was easy, but my delegation BY SEAN HONG was quite shocked when they paged NEW YORK, NY—Glen Goldstein, him,” he said. president of Bicycle Shows U.S., has “For me it was an eye-opening expe- seen little to improve his spirits since a rience. Th e League and Bikes Belong year ago, when he was forced to put his were fantastic in giving us information New York City Bicycle Show on hiatus and materials to be ready. Th ere’s no due to languid industry support. question I’ll be here next year.” Although he had hoped that his luck Heard Pike and Boyland’s sentiments were would change in 2007, Goldstein’s New echoed by many of the 435 attendees at York show remains dormant and to ex- on the this year’s Summit, March 14-16. In its acerbate matters, he has also retired his seventh year, the annual gathering set Boston show. attendance records. Industry participa- “I’m not holding my breath that the tion also was up, totaling 92; retailers shows will start up again in the future,” Photo by Jay Clark Hill The League organized Summit delegates by state, giving each group time accounted for 33 of that total. Goldstein said. “I’d like to, but I’m just to strategize and plan for their meetings with Congress members. Continued on page 50 watching at this point.” Goldstein chalks up the Boston On the Inside show’s demise to the same reason New Continued on page 32 Pacifi c Cycle feels domino ef- fect of Wal-Mart’s slugglish bike p9 business in its 2006 sales.

The fi rst batch of Coasting bikes hits the market in Chicago at St. Patrick’s Day parade. p24

15 Years of Journalism for the Trade t a t s s duced 220,965 units domestically, Strong Sales to Continue. Darkening U.S. Market Stats which were shipped to other markets. economic indicators, which hit last If true, domestic bicycle production year, did little to dampen sales and Specialty Bike, Sports Chains… last year topped 400,000 units, which should have little eff ect this year. Continued from page one seems unlikely. For example, the “Media play on health and environ- 25,842 domestically produced bikes mental issues are already high and it offi cer and chair of the Bicycle Product another $1 billion or more to total bi- shipped to China under the Depart- is just going to increase,” said Pacifi c Suppliers Association’s (BPSA) statis- cycle market sales. ment of Commerce’s miscellaneous Cycle’s Frehner. tical committee. Rising energy, materials and fuel bike category had an average unit value “Bikes fi ght obesity and are sustain- On the other side of the aisle, Pacifi c prices had relatively little eff ect on of $55. Th ese Made in USA bikes were able, environmentally friendly trans- Cycle, the largest supplier of bikes in overall import unit value. Th e average $4 cheaper than the average Chinese portation at the same time. Even if the the United States, reported that its bike imported in 2006 cost $58.76, up a bike imported into the U.S. market. economy slows, this media message is sales into the mass market were down. modest 1.6 percent over 2005, and not Th e largest export markets for U.S.- increasing and will drive bike sales. If you factor out the increase in sales much off the 3 percent rise in whole- made bikes with wheel sizes over 25 We are in a great position as an indus- of Pacifi c swing sets and motor scoot- sale price reported by BPSA members. inches, which covers road and moun- try,” he said. ers last year, its bike sales were off close Import bike value has been rising tain bikes, are Canada, Japan and the Even reports of the end of the road Netherlands. Each received 18,621, bike boom, which swept through the “I’m confident that our mass side of the business 10,247, and 7,613 units, respectively. market last spring, are premature. Th e Netherlands received bikes aver- According to the BPSA, bike shops will rebound next year, and our IBD business is aging $1,034 each, followed by Japan sold 8 percent more road bikes last year growing strongly. So many dealers are looking for at $781 and Canada at $612. than in 2005. And everyone agrees that Which markets have the deepest the glut of carbon bikes on the market a big supplier who is not Trek and Specialized, pockets for Made in USA road and will lower prices, but little impact was and for them, we are a good fit.” —Jeff Frehner, mountain bikes? Guatemala received felt last year. bikes averaging $1,342 each, followed Orbea, the little Basque bike compa- chief executive officer of Pacific Cycle. by the UK at $1,137. ny no one had heard of fi ve years ago, Are Central American countries had strong carbon road sales last year to 8 percent, while sales to bike shops steadily since ’02, when the average experiencing a hot BMX market? Gua- and expects to continue growing sales. were up double digits. value bottomed out at $49.35. temala, Costa Rica and Honduras are “Pushing carbon technology like “I’m confi dent that our mass side Import numbers are down, but unit the second, third and fourth largest we did with the Orca and Diva is al- of the business will rebound next values for kids’ bikes are up—24-inch market for U.S.-made bikes with wheel ready bringing us sales faster than we year, and our IBD business is growing bikes jumped 11.3 percent, to $48.88 sizes less than 25 inches. Canada is its expected,” said Ronnie Points, Orbea strongly. So many dealers are look- from $45.97 in 2005, and 20-inch bikes largest small-wheel market. USA’s national sales manager. ing for a big supplier who is not Trek were up 4.2 percent to $38.86. Th is is a Almost the same number of BMX “We haven’t seen any slowdown in and Specialized, and for them, we are refl ection of suppliers no longer chas- bikes were sent to Guatemala and Hon- the sales of our carbon product. Riders a good fi t,” said Jeff Frehner, Pacifi c ing opening price point business and duras as were sent to Canada last year. switch to carbon for the ride, and as Cycle’s chief executive offi cer. parents choosing to shell out more But the Central American rider has long as you make that ride better, you money to ride with their kids. deeper pockets—the average 2006 Market Report. BPSA reported Road bikes and 20-inch bikes were bike has a wholesale value of Percent of Unit Market its membership’s 2006 sales grew to also up more than 4 percent in value $250, compared to the $152 Share By Product Category $766 million, up from $710 million over 2005. Mountain bikes and sub- bikes the United States ships in 2005. Th e average wholesale sell- 20-inch sidewalk bikes were the only to Canada. 2004 2005 2006 ing price grew 3 percent from $288 in categories losing value. Th at said, the number of 20/24” All 29% 28% 25.3% 2005, to $297 last year. bikes made in the United 26” All 49% 47% 46.5% Th e number of Made in USA bikes Confusing Export Situation. Due to States and shipped into oth- Road 10% 12% 12% sold was about 195,000 units, up 5 lack of industry data on the export er markets is probably closer Hybrid 11% 13% 15.7% Tandems 0% 0% 0.2% percent over last year, representing market, Department of Commerce to 100,000 units, less than over $500 million in retail sales. Gains numbers are the only data available. half of what the Department Source: U.S. Department of Commerce made by full-suspension and smaller Th ey suggest U.S. manufacturers pro- of Commerce reports. custom builders more than off set deep losses in domestic BMX production. U.S. Bicycle Import Landed Unit Value Suppliers imported 18.1 million 2002 2003 2004 2005 2006 units in 2006, down 8 percent from Kids’ bikes wheels <20” $25.78 $24.09 $25.44 $25.30 $24.43 19.6 million units imported the year 20” wheel sizes $39.90 $40.20 $38.04 $37.31 $38.86 before. But they turned around and 24” wheel sizes $49.36 $47.75 $45.97 $48.88 $54.41 exported 65,000 of these bikes into 26” wheel sizes $78.02 $76.01 $78.31 $86.91 $83.99 other markets. 700c wheel sizes $143.15 $181.42 $114.21 $240.13 $273.02 Combine all the numbers and sup- Average unit value of all imports $49.35 $50.01 $53.61 $57.85 $58.76 pliers sent 18.2 million bikes to retail- Source: U.S. Department of Commerce ers, suggesting retail bike sales of $2.6 billion. Th is number is almost equally divided between bike shops on the one hand, and mass-market and sporting U.S. Bicycle Import Value by Category (in millions) goods retailers on the other. 2002 2003 2004 2005 2006 Change % Data on clothing, parts and acces- Kids’ $152.28 $127.64 $116.53 $152.75 $134.67 -12% sories shipped to retailers is too in- 20” $238.55 $222.19 $196.64 $210.03 $190.24 -9% 24” $90.24 $90.80 $84.02 $89.10 $93.26 5% complete to estimate sales. Th e BPSA, 26” $395.58 $380.37 $404.13 $447.18 $426.69 -5% which tracks P&A shipments to retail- 700c $76.72 $90.71 $181.25 $235.72 $212.08 4% ers, does not expect to have reliable Totals $953.37 $911.72 $982.57 $1,134.77 $1,061.27 -6% numbers until next year. Sales of parts and clothes could add Source: U.S. Department of Commerce

36 Bicycle Retailer & Industry News • April 1, 2007 www.bicycleretailer.com U.S. Bicycle Imports by Origin U.S. Bicycle Exports by Category 2004 2005 2006 Change % ’05 to ’06 2003 2004 2005 2006 Change % China 17,168,679 18,433,413 17,217,297 -7% Tire Size <25” 40,631 68,850 54,121 35,396 -34% Taiwan 1,027,145 1,117,851 774,555 -31% Tire Size >25” 94,305 92,859 137,704 61,784 -55% Canada 14,351 10,687 8,200 -23% Italy 24,065 4,092 5,366 -31% Source: U.S. Department of Commerce Other 90,687 49,365 56,903 15%

Source: U.S. Department of Commerce Top Five Parts And Accessories Categories U.S. Bicycle Imports by Category 2003 2004 2005 2006 (in millions of units) Helmets Helmets Helmets Tires 2002 2003 2004 2005 2006 Change % Tires Tires Tires Helmets Kids’ 5.907 5.297 4.58 6.037 5.513 -9% Apparel Apparel Apparel Apparel 20” 5.978 5.527 5.169 5.629 4.896 -13% Saddles Car Carriers Wheels Pedals 24” 1.828 1.902 1.828 1.823 1.714 -6% Wheels Saddles Saddles Footwear 26” 5.07 5.004 5.161 5.145 5.080 -1% 700c 0.536 0.5 1.587 0.982 0.859 -12% Source: BPSA, Data refl ects BPSA membership changes Totals 19.319 18.23 18.325 19.616 18.062 -8% Percent of Dollar Market Share Source: U.S. Department of Commerce by Product Category have a compelling reason for riders to Putting a number on the size of that 2003 2004 2005 2006 upgrade.” market, which extends from large cus- 20/24” All 12% 12% 10% 9.7% Points also is encouraged by the tom builders like ABG, Serotta, Seven 26” All 52% 48% 44% 44.7% growth in stage racing, festivals, points and Waterford that mix their custom Road 25% 29% 34% 32.6% series and the growing bike culture in lines with stock sizes, to framebuilders Hybrid 9% 10% 10% 12.2% Tandems 0% 0.4% 0% 0.3% general. Th is is not only having an ef- working out of garages, is diffi cult. fect of keeping enthusiasts upgrading, Shimano estimates that smaller Source: BPSA, Data refl ects BPSA membership changes but it is bringing non-cyclists into builders, those making less than 1,000 shops for the fi rst time. frames a year, could account for 30,000 “We have two pro-level stage races units annually. could no longer compete,” he said. a bike. It’s not surprising Target’s bike in Arkansas this year. Five years ago Th at number may seem high, but “I was down to selling a BMX frame sales were up last year. that was unimaginable. And it’s not consider the number of mountain bike made in North Carolina from U.S. More important to Wal-Mart’s just rider participation, the races are and road builders like Arrow Racing, chromoly tubing for about $130. You struggling bike sales, according to drawing huge crowds of people. Hy- Brew Racing, Co-Motion, Cranfi eld don’t make money doing that.” suppliers, was its decision to drop its brids may be their fi rst purchase, but Brothers, Davidson Cycles, Evil Bikes, Th e big BMX production shops that popular lay-away program for the hol- they’ll move up,” he said. HH Racing, Ingles Cycles/Retrotec, Lenz, Niner, Rock Lobster, Soulcraft , “We haven’t seen any slowdown in the sales of our Domestic Bike Production. Th e shin- Vicious, Willits Brand, Zinn and ing star in the domestic market is the countless others. carbon product. Riders switch to carbon for the hundreds of small custom framebuild- High-end, full-suspension produc- ride, and as long as you make that ride ers who weld or braze up frames in ga- tion also is growing. Sapa, the compa- rages or small workshops. ny formerly known as Anodizing Inc., better, you have a compelling reason for riders Every year the United Bicycle In- is the third largest producer of frames to upgrade.” —Ronnie Points, stitute (UBI) graduates a new wave of in the United States, second only to Orbea USA’s national sales manager framebuilders who try their hand at Cannondale and Trek. Santa Cruz is building. More than 1,000 people have its largest customer, although the com- taken UBI’s framebuilding classes since pany builds for other companies. remain are welding frames in the hun- idays. For a company that prides itself it started and the institution graduates Ellsworth and Intense both opened dreds of units, not the thousands of in the amount of cash business it does, about 100 builders annually. factories in the last two years and other units they did just a few years ago. the decision struck many as fl awed and Steve Garn at Brew Racing began fr- brands like Titus and Yeti continue to suppliers said it had a huge impact on amebuilding classes last year and fi g- weld up leading suspension designs. Mass and Sporting Goods Channels. holiday bike sales. ures seven of his alumni have already Until last year, domestic BMX pro- Wal-Mart is the country’s largest re- Bicycle sales at sporting goods re- started small-scale production. Th ese duction had been the darling of do- tailer of bikes. So it should come as no tailers are increasing, with estimates builders are not a blip on the radar. To- mestic manufacturing with annual surprise that if Wal-Mart’s retail busi- ranging from 800,000 to 1 million plus gether they are a formidable market. production hovering around 20,000 ness is off , so are bike sales. units sold through that channel last So much so, that Shimano started to units. “Everything’s changed and now Wal-Mart reported its fi rst store-on- year. Some of this growing volume is target small builders a few years ago. there are few BMX bikes still made in store decline last fall, aft er more than a attributable to retailers like Dick’s, Th e Kirk Pacenti, founder of Pacenti this country,” said Steve Garn, Brew decade of steady growth. Its slowdown Sports Authority and Academy open- Cycle Design, quit his day job at an Racing’s founder. comes while its major competitor, Tar- ing additional stores, and new retailers auto parts maker last year because Garn built BMX frames for a variety get, continues to grow. like Bass Pro Shops getting into bikes his business, which supplies custom of brands, and his contract BMX busi- Part of the problem, as Wal-Mart for the fi rst time. framebuilders, was growing so fast it ness grew to swamp his other work. sees it, is its lower level of merchandis- While the average retail price of required his full-time attention. But he got out of the BMX business ing—something it is revamping. bikes sold through this channel is “Part of my growth is due to being last year, citing increasing price pres- Walk into a bike department at less than through bike shops, many able to focus on my business better, sure from Chinese imports. most Wal-Mart stores and all you see retailers have added trained staff and but I think there are more custom bike “We were holding our own against are rows and rows of front tires—the smart merchandising. Suppliers think builders in business today than even a Chinese bikes, but when Vietnam re- bikes are buried behind hangtags and the average selling price through this few years ago. Just consider all the UBI ceived favorable trading status, they clutter. Walk into a bike department at channel is going up faster than at tra- graduates each year,” Pacenti said. dropped BMX prices to where we Target, and you see a clean side view of ditional bike shops. www.bicycleretailer.com Bicycle Retailer & Industry News • April 1, 2007 37 t a t s s World Stats High Inventories, Cold EU Winter Make their Mark on 2006 BY JOHN CRENSHAW facturers are even taking some pieces $35 at current exchange rates. resolution to the issues, and some U.S. Bicycle sellers in the big European out of the top-end market with their Th e United States’ inventory hold- legislators continue to threaten drastic and North American markets tore carbon fi ber expertise, but China none- over from 2005 played a big role in tariff s on Chinese products. through their inventories in 2004 and, theless took a big share of last year’s China’s lowered exports to America in predicting a similarly fruitful 2005, an hits. While 2006 statistics on produc- 2006. Th e United States imported 18.4 Taiwan ever-optimistic industry placed big or- tion, domestic sales and exports are not million Chinese bikes in 2005, 1.26 Th e 2005 bicycle backup blindsided ders with factories around the globe. available yet from China, its customers’ million more than the year before, then the island’s industry, where production But especially in the United States data reveals some of what happened. fl ip-fl opped last year, importing 1.22 dropped by 11 percent from 4.6 million and to a somewhat lesser degree in the Th e EU imposed a 48.5 percent anti- million fewer than in ’05. Th e biggest bicycles in 2005 to 4.1 million last year, European Union, that sunny outlook dumping duty on Chinese bikes in drops were in tot-sized sidewalk bikes according to fi gures from the Taiwan clouded under the reality of a fl attened 2004 and added the standard 15 per- and 20-inch models, as U.S. orders for Bicycle Exporters Association. market. Th e bikes didn’t roll out the cent duty on top of that in 2005, boost- 26-inch and road models from China Taiwan’s exports to the United States, doors as predicted, and inventory ing the price of a Chinese bike by 63.5 actually ticked up. Most go to mass- its biggest customer, led the slide. Tai- backed up from showroom fl oors up percent at the EU’s borders. market outlets, but more and more are wan built 804,000 bikes for U.S. im- the supply chain through suppliers’ Th e eff ects were immediate, and in independent retail at the entry level. porters in 2005, but just 565,000 in warehouses. Th e West’s overstocks car- they continue. Th e 25 EU member na- An export loss nearing 2 million 2006, a 30 percent drop. Much of the ried through into 2006, with big rami- tions imported more than 2.3 million units is hard to miss, and BRAIN’s in- hit came in the 26-inch mountain bike fi cations for Asian suppliers. Chinese bikes in 2004. Th at number ternational editor, Doug McClellan, re- and comfort bike categories. Th e EU’s anti-dumping duties on dropped 44 percent to 1.3 million in ports that several Chinese bike manu- Unit export numbers to the EU fell Chinese and Vietnamese bikes, coupled 2005 and, according to preliminary fi g- facturers are diversifying into fi tness by 9 percent, 270,000 units, to slightly with severe weather in Europe, also fac- ures from Eurostat, dropped by nearly equipment. more than 3 million total to all 25 mem- tored into a faltering 2006 market and a half again in 2006 to 617,000 units. On a broader scale, China’s resis- ber nations. Th e United Kingdom took worldwide sourcing shuffl e. Th e models being brought in don’t tance to revaluing its currency, and its more than 700,000 of them, putting it generate huge revenues. Th ose shipped allegedly unfair state support of key ahead of the United States in terms of China to the western 15 EU countries brought industries such as steel, continue to irk unit numbers. China indisputably continues to just 35 euros, on average, and those U.S. lawmakers. Th e Bush administra- Th e hit to U.S. exports alone cut dominate the world bicycle market in destined for the eastern 10 nations a tion recently fi led a complaint with Taiwan’s sales revenues by $49 million, terms of sheer volume, and its manu- scant 18 euros—an overall average of the World Trade Organization seeking and the diminished value of exports to the EU chopped out another $39 mil- EU 15 Bicycle Imports From Eastern Europe lion compared with 2005 sales. Global sales revenues dropped a total of $79.6 2001 2002 2003 2004 2005 2006 million, just under 9 percent. Poland, Units 519,895 616,119 759,742 836,635 917,764 665,538 Although total revenues were down, Dollar Value/Mil. 50.450 67.031 73.961 79.491 96.082 65.031 Taiwanese builders did have one piece Bulgaria, Units 29,680 94,813 183,557 208,859 266,985 373,152 of good news. Th e average FOB (freight Dollar Value/Mil. 3.111 9.424 15.013 1.715 22.464 31.283 on board) price of a Taiwan-built bicy- Hungary, Units 39,095 75,625 112,764 139,383 107,798 142,458 cle hit $206, cracking the $200 barrier Dollar Value/Mil. 5.579 12.180 21.231 32.538 28.932 38.027 for the fi rst time. Average price in the Czech Republic, Units 229,335 178,622 230,277 157,292 146,166 121,321 United States was $359, a good jump Dollar Value/Mil. 24.833 22.069 34.574 34.028 32.820 28.256 from 2005’s $313. Average price for all Romania, Units 3,857 198 215 1,621 33,852 45,865 25 EU countries was $155. Dollar Value/Mil. 0.297 0.002 0.026 0.120 2.333 4.082 Th e lower-value shipments to Eu- Total Units 821,862 965,377 1,286,555 1,343,790 1,472,565 1,348,334 rope probably refl ect manufacturers’ Total Dollar Value/Mil 84.269 110.706 144.805 163.891 182.631 166.678 shift of entry-level bike production for *Dollar value in millions, based on exchange rates of Dec. 31, 2006 the EU from China to Taiwan, which is Source: Eurostat not subjected to anti-dumping duties. It’s something TBEA executives, who Altered Asian Landscape in The E.U. Bicycle Scene Total Total Value/ Value/ Average China China Taiwan Taiwan Vietnam Vietnam Extra-EU Extra-EU $1 Mil $1 Mil Sale Price Country/Region Units, 2005 Units, 2006 Units, 2005 Units, 2006 Units, 2005 Units, 2006 Units, 2005 Units, 2006 2005 2006 2006 United Kingdom 211,002 71,051 618,408 695,442 464,762 154,998 3,073,367 2,894,246 236.14 240.36 $83 Germany 81,892 61,576 384,544 324,539 143,479 185,467 925,428 1,198,915 117.95 156.63 $130 Belgium/Lux 285,672 125,276 458,532 306,392 118,353 14,694 908,849 842,761 86.75 94.82 $112 Netherlands 156,193 56,855 251,947 290,528 79,140 55 642,474 560,650 98.78 109.51 $195 Italy 190,563 80,868 83,918 101,839 31,513 1,561 503,139 508,367 39.29 50.26 $99 Poland 174,788 78,208 71,500 87,733 49,454 13 315,490 224,100 19.58 18.37 $82 Czech Republic 9,080 8,218 108,402 106,381 4,510 50 227,354 245,044 24.81 29.82 $121 Old EU 15 Total 925,322 493,901 1,797,349 2,508,755 837,247 423,407 8,277,314 7,870,478 857.28 846.79 $107.59 New EU 10 Total 183,868 194,606 179,902 220,099 53,964 63 864,932 738,747 70.22 84.75 $114.72 Eu 25 Total 1,305,712 688,507 2,740,003 2,728,854 1,194,318 423,470 9,142,246 8,609,225 927.50 930.54 $108.86 Change From Prev. Year -1,021,905 -617,205 360,580 -11,149 -702,806 -770,848 --215,095 -533,021 69.94 3.03 % Change From Prev. Year -43.90% -47.27% 15.15% -0.41% -37.05% -64.54% -2.3% -5.83% 8.16% .33%

(Source: Eurostat. Includes revised 2005 fi gures; not all 2006 data available.)

38 Bicycle Retailer & Industry News • April 1, 2007 www.bicycleretailer.com strongly contend Taiwan’s bicycle man- products, at least one moved operations people are more interested in cy- Taiwan’s Bicycle Exports ufacturing future hinges on the highest to Cambodia, and all are almost assur- cling, whether for fun, or for health end of the market, are looking into. edly looking for new markets. One of reasons. And we see all the bigger 1997-2006 One solution would be to shift low- those could be the United States, and at countries, France, Germany, Italy, Year No. Units Value (U.S. $) er-end manufacturing to a third coun- least some U.S. product managers have Holland, paying attention to cy- 1997 8,955,424 $873 million 1998 9,388,311 $897 million try—that used to be Vietnam—with looked into Vietnam’s possibilities. To cling, to the bicycle routes and park- 1999 7,782,869 $760 million lower labor costs and favorable trade date, logistical problems and bureau- ing,” he said. 2000 7,534,350 $821 million status with Europe. Two years ago, cratic obstacles seem to have deterred Europe’s independent retail stores 2001 4,796,148 $536 million TBEA executives took a serious look any signifi cant orders. are experiencing much of the same 2002 4,219,038 $524 million at Bangladesh, which shipped more attrition seen in the United States, 2003 3,882,835 $583 million than 300,000 bikes to Europe last year. European Union he said, “and it’s not all bad, because 2004 4,348,037 $721 million In 2006, the Taiwanese met with their Some of the same forces pushing in general they see total sales vol- 2005 4,594,991 $919 million counterparts in India, again eyeing the Taiwanese manufacturers to seek fa- ume increase, and as it goes through 2006 4,083,637 $840 million possibility of a partnership aimed at the vorable labor costs and duty rates are less dealers, all the remaining ones European market. driving Western European brands to have a little more. Th at helps them Sources: Taiwan Bicycle Exporters’ Association, No new factories or investments have look to Eastern Europe. be more professional, and to invest Taiwan Bureau of Foreign Trade come from either meeting, but some Imports from Poland, Czech Repub- a little more.” moves seem inevitable. lic, Hungary, Bulgaria and Romania, Germany’s independent channel fi gures from Eurostat, down from 3.5 although hardly ready to bump Taiwan snagged a little bigger share of the million in 2005. German manufactur- Vietnam off the top spot, are increasingly part of EU’s biggest national market, reported ers exported about 480,000 bikes, up Taiwanese manufacturers had in- the EU mix. Markus Fritsch, editor of trade publica- from 380,000 the year before. vested heavily in Vietnamese facto- “Th ere’s no choice, really,” said René tion SAZ Bike, going up from 52 per- France imported about 360,000 few- ries, primarily producing for Europe Takens, president of the European sup- cent to 54 percent of all bike sales. Sales er bikes in ’06 than ’05, and early esti- and bypassing anti-dumping duties on pliers’ group COLIBI and chief execu- in Germany overall were down 7 per- mates are that sales fell by more than a Chinese bikes. Exports of Vietnamese tive offi cer of Accell. “We cannot im- cent, however, to 4.4 million bicycles. half-million units. bikes sky-rocketed, average sale prices port from Asia, so to go to countries More than half of Germany’s inde- Italy, second only to Taiwan as an ex- plummeted, and the EU responded in with low labor costs, we have to go to pendent retailers reported increased porter to the rest of Europe, had a fl at 2005 with 34.5 percent anti-dumping Eastern Europe. We decided to do it revenues last year in spite of that, profi t- year, reported Pietro Nigrelli, head of duties. ourselves. We have better control over ing from increased accessory sales and the bicycle division of the trade asso- Th e eff ects were even more dramatic quality, delivery, all those things,” he higher average sales prices on bikes, up ciation ANCMA. He estimated about 2 than the EU action against China. Ex- said, referring to Accell’s factory in from 539 ($711) to 564 euros ($735). million sales, and 2.5 million produced ports to Europe fell from 1.9 million Hungary. Germany imported about 2.4 mil- in Italy, which also imported about units in 2004 to 1.2 million in 2005 to Overall, 2006 had bright spots in lion bikes last year, according to early 770,000 units. 730,000 last year. spite of a hard winter, Takens said. “Th e Some of the Taiwanese-invested Viet- industry had a lot of new products, and World Players in The Bicycle Market namese factories diversifi ed into other we can see—not only in Europe—that (Figures in Million Units) Production Top Sources of E.U. 25 Bicycle Imports Area 2000 2001 2002 2003 2004 2005 2006 (Unit fi gures in millions; by 2006 ranking) China 52.2 51.2 63 73 73 80.73 *79.50 Taiwan 8.0 5.0 4.4 4.3 4.4 4.7 4.3 % Change European Union** 12.3 10.5 10.2 10.38 10.35 10.3 *10.0 Country 2002 2003 2004 2005 2006* ’05-’06 United States 0.88 0.91 0.41 0.35 0.335 0.191 0.3 Taiwan 2.185 2.116 2.379 2.740 2.729 0% Japan*** 4.7 4.18 3.08 2.51 2.45 1.93 *1.38 Italy 1.329 1.553 1.543 1.210 1.329 10% Italy 3.2 2.65 2.35 2.55 2.6 2.5 *2.5 Thailand 0.179 0.326 0.451 0.696 0.691 -1% Germany 3.3 2.99 3.05 3.19 2.92 2.9 1.98 Poland 0.623 0.766 0.849 0.920 0.664 -28% France 1.9 1.6 1.42 1.49 1.73 1.6 *1.3 Imports China 1.501 2.018 2.328 1.306 0.689 -47% China N/A N/A N/A N/A N/A N/A N/A Philippines 0.533 0.624 0.542 0.648 0.594 -8% Taiwan N/A N/A 0.07 0.29 0.62 0.68 0.50 Vietnam 0.730 1.383 1.897 1.194 0.423 -65% European Union** 9.41 8.52 10.20 12.27 14.05 15.40 *14.4 Total, Extra EU 6.195 7.997 9.325 9.142 8.609 -6% United States 20.3 16.40 19.30 18.20 14.05 19.60 18.06 Total, Intra EU 5.316 6.020 6.632 7.650 6.045 -21% Japan*** 6.2 7.09 8.33 8.70 9.14 9.14 9.45 Total, All Sources 11.512 14.019 15.959 16.792 14.407 -14% Italy 0.22 0.45 0.45 0.47 0.62 0.82 0.77 Germany 2.3 1.80 2.00 1.62 2.45 3.49 2.43 (Source: Eurostat. *Not all 2006 data available) France 1.4 1.10 1.45 0.16 2.30 2.93 2.57 Exports China* 32.80 34.94 46.09 50.84 51.75 53.58 52.0* Taiwan Exports of Complete Bicycles, 2006 Taiwan 7.53 4.80 4.20 3.88 4.35 4.59 4.10 Country Units Value/$1,000 $/ASP European Union** 3.90 3.63 4.32 5.19 5.70 6.10 5.80 United Kingdom 783,512 101,444 129.47 United States 0.18 0.19 0.16 0.13 0.16 0.19 0.10 United States 564,952 202,568 358.56 Japan*** 0.56 0.56 0.65 0.87 1.00 1.22 1.32 Germany 440,072 74,954 170.32 Italy 1.75 1.41 1.42 1.59 1.55 1.35 1.25 Belgium 304,601 53,927 177.04 Germany 0.25 0.23 0.26 0.51 0.56 0.38 0.48 Netherlands 288,014 74,264 257.85 France 0.33 0.30 0.37 0.53 0.72 0.88 0.87 Sweden 278,046 26,013 93.56 Japan 205,777 39,886 193.83 *Estimated; 2006 data not available at press time. Denmark 119,094 140,040 117.89 **EU 15 only: Import/export fi gures include imports from both EU members and non- Australia 103,507 40,195 388.83 members; some 2006 data not yet available. Canada 100,848 38,679 383.54 ***December data estimated. Japanese export fi gures include indeterminate numbers of All Others 895,214 187,506 209.45 discarded bikes impounded, then exported to third-world countries as charity. 2006 Total 4,083,637 839,436 205.56 Sources: ANCMA, Bicycle Retailer and Industry News, Bike Europe, Cycle Press, China 2005 Total 4,594,991 918,720 199.94 Bicycle Association, European Bicycle Manufacturers Association, Eurostat, Japan Bicycle 2004 Total 4,348,037 720,746 165.76 Promotion Institute, Shimano, Taiwan Bicycle Exporters Association, Wheel Giant www.bicycleretailer.com Bicycle Retailer & Industry News • April 1, 2007 39 t a t s s Retail Stats End of Road Surge Contributes to Specialty Retail Sales Decline BY JASON NORMAN “Th e drop-off and subsequent inven- While 2005 set the bar higher than tory build was more the result of simple it’s ever been with almost $6.2 billion saturation,” Townley said. “Th e enthu- Projected Retail Sales (In Millions) in total retail sales, 2006 came in off siast segment of adult riders—which is of U.S. Bicycle Industry 2002-2006 that record pace at about $5.8 billion, fi nite—purchased all they could, and showing a 6 percent decline. will ride what they have purchased for 2002 2003 2004 2005 2006* “If 2005 were taken out of the picture, a while.” Athletic & Sport 2006 would be the best year for retail Th e so called “Lance factor” had little, Clothing: Bicycling 625.1 672.9 757.6 784.1 819.0 sales of bicycles and related clothing, if nothing, to do with the surge ending, Athletic & Sport shoes and other cycling gear over the Townley said. “Most analysts think it Footwear: Cycling Shoes 45.5 42.0 42.5 49.5 50.0 [past] four years,” said Jay Townley of was simple saturation,” he added. Recreational Transport: the Gluskin Townley Group, citing its Bicycles & Supplies 4,961.3 4,736.0 4,897.7 5,342.9 4,940.0 own data along with Th e Cycling Con- Specialty Retail Sales Slide. Specialty Total: 5,631.9 5,450.9 5,697.8 6,176.5 5,809.0 sumer of the New Millennium Report. retailers took the biggest hit from the Th e reason for the slide is due in large overall sales decrease. In 2006, special- *forecast part to 700c road bikes. In 2005, high- ty retailers sold 2.6 million units, 14 value 700c road bikes sold in record percent of the total units sold. In 2005, Source: The National Sporting Goods Association (NSGA): The Sporting Goods Market in numbers. In 2006, low-value 700c road the channel sold 3.2 million units, 2006. bikes sold at mass merchants such as which accounted for 16 percent of the Wal-Mart and Target for the fi rst time total units. annual sales of bicycles over the eight that three brands have introduced and at retail prices below $200, according While mass merchants and sporting to 10 years it will take to complete the will launch this spring with the assis- to Townley. goods chains did see a drop off in units expansion plan.” tance of Shimano in 15 markets around “Th ere are some in the industry that sold, they lost little when it came to Townley believes specialty retailers the U.S.,” Townley said. are predicting that the road 700c surge percentage of total units—mass mer- are their own worst enemy. “Th e spe- Shimano selected 15 markets be- has ended for the specialty bicycle re- chants sales only dropped 1 percent cialty bicycle retailer is too narrowly cause they are bicycle friendly—one of tail channel of trade,” Townley said. from 2005 to 2006. focused on the enthusiast adult cyclist, the prerequisites its research indicated “Th at high-end bicycles overall will Townley believes chain sporting who is predominantly white males,” had to be present for more baby boom- start to decline in favor of mid-priced goods to be the biggest “up-and-com- Townley said. “Th e brand/suppliers ers to get back on a bicycle. “If this large hybrid and comfort models—signaling ing challenger” to both the mass mer- and the majority of bike shops have market test gains traction for Coasting a decline in retail revenue from bicycle chant and specialty retailer in the years ignored women, ethnic diversity and within the comfort product category, a sales. Time will tell if this is near-term to come, with Dick’s Sporting Goods non-enthusiast baby boomers.” major increase in sales volume may be speculation or a long-term trend.” leading the way. Lack of customer service, Townley in the off ering,” Townley added. Th e initial road surge was generally “Dick’s still isn’t a national retailer, said, also isn’t helping the specialty Coasting could very well be what the attributed to the enthusiast segment of but it has announced plans to build over retailer. “Most bike shops both ignore baby-boomer crowd is looking for. A the market upgrading and buying new 900 new locations in the states where and succeed in scaring off everyone no fuss, no muss comfort bike with au- top-end road bikes, according to Town- it does not now have stores,” Townley except the enthusiasts who are mem- tomatic shift ing providing an enjoyable ley. A secondary contributor said. “Th is aggressive build- bers of the exclusive club environment riding experience. “If the specialty bi- was the increase in ing program will au- of too many retailers in our channel,” cycle retail channel of trade doesn’t take triathlon par- tomatically add Townley said. “If [specialty retailers] full advantage of the Coasting concept, ticipants. Schwinn to Dick’s die, it will be at their own hand.” some other retail channel or channels 9.0% will,” Townley said. “Th e opportunity is Giant 230,066 Category Catalyst? Th e numbers don’t that big.” 10.0% lie for 2006: hybrid/cross bikes saw the As far as mountain bikes go, 2006 255,629 biggest percentage increase over 2005. numbers indicate no big surprise in Specialized Cruiser and 700c road also saw gains, that consumers want full-suspension but perhaps the new category in the fu- off erings, while front-suspension and 8.5% ture will be Shimano’s Coasting. rigid mountain bikes continue to lose 217,284 “Watch the new Coasting product traction.

Trek Specialty Bicycle Retail Channel Estimated 22.5 Raleigh 2006 Retail Sales Of Bicycles By Brand 7.5% 575,165 2006 Percent Share 191,722 2006 Estimated Units

Diamondback Cannondale Top Tier Brands 5.0% Sub Total: 75.0% 1,917,217 3.0% Fuji 127,814 All Other Brands 25.0% 639,071 76,689 4.0% 102,252 Total Estimated SBR Retail Sales: 100.0% 2,556,288 Gary Fisher GT 2.5% 3.0% Source: 2007 Bicycle Leadership Conference Business Information Group; NBDA Surveys and Research Reports; The Gluskin Townley Group, LLC 63,907 76,689 Estimates.

40 Bicycle Retailer & Industry News • April 1, 2007 www.bicycleretailer.com 2006 U.S. Bicycle Apparent Market Consumption by Channel of Trade 2006 U.S. Bicycle Market Features of Channels of Distribution Channel Units* Percent Units Dollars* Percent $ Average MM 13,876,990 76.0% $999,143,315 37.7% $72 SBR 2,556,288 14.0% $1,150,329,474 43.4% $450 Mass Merchant Specialty Chain Sporting Other OSR 182,592 1.0% $77,601,592 2.9% $425 Bicycle Goods CSG 1,095,552 6.0% $246,499,173 9.3% $225 Retail Other 547,776 3.0% $178,027,181 6.7% $325 Total 18,259,198 100.0% $2,651,600,734 100.0% $145 13.9 million units, 2.6 million units, 1.1 million units, 550,000 units, 3% 76% of the total 14% of the total 6% of the total of the total units. Defi nitions: units. units. units. MM = Mass Merchants SBR = Specialty Bicycle Retailers Four large retail- 4,450 indepen- 30 sporting goods A variety of OSR = Outdoor Specialty Retailers, including Camping, Outdoor ers that do 60% dent, spe- retailers: outdoor / outside Shops, Ski Shops, etc. of Mass Market cialty bicycle • Sports retailers, mail-or- CSG = Chain Sporting Goods, or Full-Line Sporting Goods channel total, or retailers. (Note: Authority/Gart der and Internet Other = Catalog, Internet, Hardware Stores over 40% of all Performance • Champs Sports retailers and all retail sales: retail stores are • Dick’s Sporting other local and *Estimated • Wal-Mart included.) Goods/Gallions regional retailers • Kmart • JumboSports of bicycles. Source: NBDA Research Reports, Gluskin Townley Group, LLC market statistics, esti- • Target • Sportmart • Mail-Order mates and projections. • Toys-R-Us • Internet • Hardware Stores Specialty Bicycle Retail Channel $999-million in $1.1 billion in an- $246 million in $178 million in 2005 and 2006 Estimated Unit Sales annual bicycle nual bicycle retail annual bicycle annual bicycle By Product Category retail dollars, dollars, 43.4% retail dollars, retail dollars, 37.7% of total an- of total annual 9.3% of total an- 6.7% of total an- Product Category 2005 2005 Est. 2006 Est. 2006 Est. nual bicycle retail bicycle retail dol- nual bicycle retail nual bicycle retail Percent Units Percent Units dollars. lars. dollars. dollars. Mtn Front Susp 16.60 456,314 16.50 421,788 Mtn Full Susp 6.60 181,426 7.00 178,940 $72 average unit $450 average unit $225 average unit $325 average unit Mtn No Susp 5.60 153,937 5.00 127,814 retail price retail price retail price retail price All Mtn Sub Total: 28.80 791,677 28.50 728,542 Comfort 14.20 390,341 14.00 357,880 Major Bike Major Bike Major Bike Major Bike Hybrid/Cross 13.90 382,094 15.00 383,443 Suppliers Suppliers Suppliers Suppliers Cruiser 5.50 151,188 6.00 153,377 • Pacifi c Cycle • Trek Bicycle • Huffy Bicycles • Pacifi c Cycle Road/700c 16.40 450,816 17.00 434,569 Mongoose Corp. Royce Union • Dynacraft Freestyle 3.70 101,708 3.00 76,689 Roadmaster • Giant Bicycle • Raleigh America Bicycles BMX 5.10 140,193 4.50 102,252 • Dynacraft Inc. Diamondback • Huffy Bicycles Youth 19” 3.00 82,466 3.00 76,689 Bicycles • Specialized • Pacifi c Cycle • Rand Youth 20” 4.20 115,453 4.00 102,252 Magna • Raleigh Mongoose International Youth 24” 2.80 76,969 2.50 63,907 • Huffy Bicycles America Schwinn • Kent All Youth Sub Total: 18.80 516,789 16.50 421,788 Royce • Pacifi c Cycle GT International Union Schwinn • K2 Other 2.4 65,973 3.00 76,689 • Rand GT • Haro Totals: 100.0 2,748,877 100.0 2,556,288 International • Cannondale Sources: U.S. Department of Commerce Import Statistics for 2005 and 2006; Gluskin • Kent • Haro Townley Group estimates for 2005, and 2006, excluding exports. International • Redline Plus over 260 additional brands Top Tier Brands Lose Steam. Trek tier brands will likely stay with the bike and suppliers. has been at the mountaintop for quite shop channel long-term, meaning that MM channel SBR channel CSG channel The Other chan- some time, followed by rivals Special- they will be in a continuing struggle stocks and sells a stocks and sells stocks and sells a nel stocks and ized and Giant. to maintain their share in the specialty limited selection the widest selec- relatively wide se- sells a wide selec- But it seems competition is taking channel, according to Townley. of bicycle parts tion of bicycle lection of bicycle tion of bicycle sales away from the top-tier brands. All Th at could be the reason Trek and and accesso- parts and acces- parts, acces- parts, acces- three brands saw their specialty retail Specialized are leading the push into ries, and some sories, clothing sories, clothing sories, clothing market share shrink in 2006. concept stores. “Th e top tier gets more clothing. It is and shoes. It is and shoes. It is and shoes. It is “Th e biggest story associated with the fl oor space of their ‘concept’ stores and estimated that the estimated that estimated that estimated that top-tier brands is the lack of barriers in retailers,” Townley said. “Keeping the MM channel does the SBR channel the CSG channel the Other channel between 22 and does between does between 24 does between 19 an intensely competitive market over competitive brands out.” 24% of the an- 30 to 31% of the and 26% of the and 24% of the the last decade creating an expansion Th e primary problem with this strat- nual aftermarket annual after- annual aftermar- annual aftermar- of bicycle brand choices to over 278 in egy, Townley said, is it’s being deployed business at retail. market business ket business at ket business at 2006,” Townley said. in a U.S. bicycle marketplace that is $742 to $809 at retail. $1 retail. $809 to retail. $641 to Th is leads to the conclusion that “the locked in a state of “perfect competi- million estimated billion estimated $877 million esti- $809 million esti- 80-20 rule is no longer applicable to our tion.” Everyone is a “price taker,” and aftermarket retail aftermarket retail mated aftermar- mated aftermar- channel of trade,” Townley said. no brand, supplier or retailer can aff ect dollars. dollars. ket retail dollars. ket retail dollars. “Th e top tier has been slowly los- the channel pricing. ing volume, not just to each other, but Th is, Townley said, fosters growth of overall to the 260 bicycle brands in the second- and third-tier brands “as retail- Sources: The Gluskin Townley Group, LLC analysis; The Cycling Consumer of the New second and third tier of the supply side ers search for higher margin product to Millennium Report. of the channel,” Townley said. increase their overall operating gross Despite retail consolidation, the top- margin and net profi t.” www.bicycleretailer.com Bicycle Retailer & Industry News • April 1, 2007 41 t a t s s Consumer Stats For Second Year, Cycling Participation Shows Signs of Life BY SEAN HONG NSGA data indicates that the num- Participants age 7-17 made up 39.9 age 18 and up hasn’t deviated much Th e good news is 2005 marked the ber of cyclists who ride “once or twice percent of all cycling participants in from the 60 percent mark. Th e year second year in a row that the number a month” has been edging up as a per- 2005, the lowest percentage for this 2005 saw adults make up 60.1 percent of cycling participants increased in centage of all cyclists. However, data age group since 1993. However, the of the participant population, with the United States. Th e bad news is the shows these “infrequent” riders rarely highest mark ever recorded for this the low points occurring in 1997 and statistics once again indicate that bi- purchase new equipment, if ever. age bracket was only 3.7 percent high- 2001, when the percentage dipped to cycling remains a sport for a predomi- “Th e challenge—and it’s true across er, which occurred in 1997 and again 56.4 percent. nantly affl uent, all-men’s club. many other sports and recreation ac- in 2001. Th e percentage of cyclists age Because cycling participation data According to numbers gathered tivities—is to make frequent riders out 7-17 have consistently hovered around was only gathered for people ages from a sports participation study of infrequent ones,” Doyle said. 40 percent since 1993. seven and up, bicycles with 19-inch conducted by the National Sporting NSGA data indicates “frequent” rid- Likewise, the percentage of cyclists wheels or smaller were not considered Goods Association (NSGA), 43.1 mil- ers (the top 25 percent of participants) lion people age seven or older hopped are generally responsible for 60 to 70 Total U.S. Bicycle Riding Participation on their bicycles at least six times in percent of hard good purchases in al- 2005. Th at’s a 7 percent increase over most all recreational categories. (in millions) the 40.3 million people who made a Participation among people who 43.1 half-dozen outings by bike in 2004. ride their bicycles 110 days or more per 41.4 In 2003, only 36.3 million people year, identifi ed as “frequent” cyclists, 40.3 qualifi ed as participants, the lowest remained relatively steady compared 36.3 number recorded on the NSGA study to the declining number of regular that went back to 1993. participants. Since 1993, frequent par- “What jumps out is that in 2005, ticipants have consistently comprised we had an uptick, and the hope is roughly 15 percent of the total num- that maybe this is a refl ection of the ber of participants, though the trend federal and state monies that have line dips downward slightly. Th e most been put into [cycling] facilities,” said recent fi gures show that 5.6 million 2002 2003 2004 2005 Jay Townley of the Gluskin Townley people participated frequently in the Source: National Sporting Goods Association Group. sport in 2005. and the Sports Business Research Network “All it shows is that the trend line “I think ‘fl at’ is the theme here. has now stopped declining. Th e two We’re at a pretty high level but it’s not Total U.S. Bicycle Riding Participation years of digging out of the hole don’t really growing. Th ere have been trends yet signal an upturn, but they’re en- within the overall number, such as Compared to Bicycle Riding Participation couraging,” he added. the road bike boom, but overall we’re by Males Versus Females* Despite two years of modest prog- seeing stability,” said Fred Clements, ress, bicycling participation still re- executive director of the National Bi- 2002 2003 2004 2005 mains on the decline since the mid cycle Dealers Association. All Bicycling Participants 41.4 36.3 40.3 43.1 1990s, when cycling participation Male Participants 22.5 20.4 21.6 24.2 rates skyrocketed during the moun- Kids Versus Adults. A two-category Female Participants 18.9 15.9 18.7 18.9 tain bike boom. In 1995, a prodigious breakdown by age reveals that behav- Male Participation Percent 54.3% 56.1% 53.5% 56.1% 56.3 million people were classifi ed as ioral shift s in cycling participation af- Female Participation Percent 45.7% 43.9% 46.5% 43.9% *In millions participants. fect children and juveniles about the Source: National Sporting Goods Association and the Sports Business Research Network Townley is not overly dismayed by same as adults. the shrinking number of cycling par- ticipants. He said that at the sport’s Total U.S. Bicycle Riding Participation by Household Income peak in 1995, cycling ranked third in participation among all sports ac- (Under $50,000 Versus $50,000+)* tivities. In 2005, cycling was still a re- spectable sixth. 1993 1995 1997 1999 2001 2003 2005 “Th at’s not bad, given the fact that All Bicycling Participants 47.9 56.3 45.1 42.4 39.0 36.3 43.1 all sports activities suff er from the $49,999 and Under 30.7 35.9 24.9 22.1 17.8 14.4 19.7 same thing—competition from video $50,000 and Up 17.3 20.6 20.3 20.2 21.2 21.9 23.4 games and latchkey children who Percentage $49,999 and Under 64.1% 63.8% 55.2% 52.1% 45.6% 39.7% 45.7% aren’t allowed to play outside any- Percentage $50,000 and Up 36.1% 36.6% 45.0% 47.6% 54.4% 60.3% 54.3% more,” Townley said. “Th ere’s a lot of *In millions competition for where people spend Source: National Sporting Goods Association their time, but there’s still potential for growth.” Tom Doyle, NSGA’s vice president of Total U.S. Bicycle Riding Participation for Households with Incomes information and research, takes a more $75,000 and Over* pessimistic view of cycling’s growth po- tential given its current ranking among 1993 1995 1997 1999 2001 2003 2005 other activities. All Bicycling Participants 47.9 56.3 45.1 42.4 39.0 36.3 43.1 “Th e number of people cycling is Participants with Income of $75,000+ 6.9 8.6 9.5 10.2 11.9 13.3 15.0 among the highest in all sports and Percentage $75,000 and Up 14.4% 15.2% 21.0% 24.1% 30.5% 36.6% 34.9% recreational activities, which limits *In millions growth possibilities,” Doyle said. Source: National Sporting Goods Association

42 Bicycle Retailer & Industry News • April 1, 2007 www.bicycleretailer.com in the NSGA report. $50,000 and those with incomes un- According to the Bicycle Industry der that benchmark, and an interest- U.S. Bicycle Riding Participation for Statistics Desk Reference, which was ing trend emerges. Frequent Participants* (in millions) prepared by the BLC Business Infor- Participants with household in- mation Group and released during comes under $49,999 since 1993 have February’s Bicycle Leadership Con- participated at rates very similar to the 5.6 6.1 5.6 ference, one major challenge facing entire pool of participants—that is, the industry is determining a strategy their peaks and valleys coincide neatly 5.1 to lure more members of the 7-17 age with that of the participation levels group into cycling. among all bicycling participants. Th e 17.2 million children and juve- Despite the general declining rate of niles that participated in bicycling in participation among all cyclists, those 2005 represent far less than half of the with incomes $50,000 and up are 54.4 million children and juveniles steadily increasing their participation living in the United States. A full 37 in cycling. 2002 2003 2004 2005 million more youths remain an un- “What we’re seeing is that cycling Source: National Sporting Goods Association; the Sports Business Research Network tapped market—and an attractive one has become an activity of higher in- *People who ride their bicycles 110 days or more a year. at that, given the potential for turning come households. Th ere’s no denying them into lifelong cycling consumers. that. Cycling as a sports activity in cling as transportation is increasingly ty bicycle retail channel stinks. It is One segment of the youth popu- the United States is skewing toward becoming a viable option for people of worse than not good. A number of us lation that looks particularly acces- higher household incomes for casual, all income groups,” Clements said. have said this for some time,” he said. sible and promising is the under-18 fi tness and recreational riding,” said “I love to mystery shop. I’m bald, I group that is identifi ed as residing in Townley, who partially attributes this Lack of Diversity. According to Town- have a beard and I’m overweight. And a household with an adult cycling par- income gap to the exploding baby- ley, the enthusiast subculture is over I am totally ignored at some of the ticipant. boomer market. 80 percent white and over 70 percent fi nest bike shops on a consistent ba- In 2005, 27.2 million, or 63.1 percent Breaking down the participation male. “[Th e bicycle industry] caters to sis. Th ey don’t see me. Th ey don’t see of all bicycling participants lived in a rates by smaller, more detailed income above-average income, college-edu- women,” he added. household with at least one child un- brackets reveals that cycling participa- cated white males,” he said. Too many employees at the retail der 18. tion rates are the lowest in low-income Th e lack of diversity in the in- level speak condescendingly to—or Given the important role children households, and get progressively dustry—from race courses to shop even worse, casually dismiss—shop- and juveniles play in the purchasing higher with each step up the income fl oors—spells the fi rst challenge of pers who fall outside of the white male decisions of a household within cer- ladder. making cycling a more mainstream demographic, Townley said. Th e re- tain categories, these fi gures on the Clements, however, sees no reason sport. sult is that many people avoid the dis- youth market are a good reminder that why bicycling need be considered a Females represent 51.1 percent of pleasure and never step foot in a bike it could be worthwhile for the indus- sport of the affl uent. the total U.S. population, but can nev- shop. try to emphasize the family-friendly “Cycling can be very aff ordable and er seem to reach cycling participation “We need to change the culture of nature of bicycling. using a bike is free. It’s true that the numbers proportional to their demo- the channel so that we are focusing on U.S. is primarily a recreation market graphic. In 2005, females comprised the experience, not the product. We Sport of the Privileged? Take one driven by people with disposable in- only 43.9 percent of the participant also have to make sure that the people look at the numbers of bicycling par- come, but we’re much more. Cycling population. that populate the shops understand ticipants with household incomes over is more than just a game like golf. Cy- Th e gender disparity becomes more clearly that they’re there to serve the pronounced at the high-end of the consuming public,” Townley said. Bicycle Riding Participation market. Townley points out a case study By Household Income in 2005 “Th e consumer research shows that from the book “Blink,” by Malcolm women are well represented in the ca- Gladwell, in which city orchestras Percent of Number of Percent of sual and infrequent rider segments. during the 1970s suff ered from an en- Total U.S. Participants All Riding As frequency of riding increases, the demic prejudice, avoiding the hiring Participants population becomes increasingly of women due to their alleged musical Under $15,000 17.0% 4,180,700 9.7% male,” Clements said. inferiority. $15,000-$24,999 13.2% 3,792,800 8.8% He added that the trend can be re- Upon becoming unionized, orches- $25,000-$34,999 13.4% 4,008,300 9.3% versed by tailoring more products and tra selection committees were forced $35,000-$49,000 16.0% 7,714,900 17.9% services to women. Improving cycling to listen to auditions where, through facilities would also go a long way to- the use of screens, the musician’s iden- $50,000-$74,999 19.0% 8,361,400 19.4% ward bolstering participation. tity was completely shielded from the $75,000+ 21.4% 15,041,900 34.9% For Townley, the reason behind the judges. gender gap is simple. Once the hiring committees made Source: National Sporting Goods Association “Customer service in the special- their decisions based solely on the sound of the musical instruments, the Total U.S. Bicycle Riding Participation by Age Group result was that women began to be se- (7-17 Years of Age Versus 18-75+)* lected in droves, and the female inferi- ority myth quickly died out. Reinvigorating the participation, 1993 1995 1997 1999 2001 2003 2005 culture and sales of bicycles will re- All Bicycling 47.9 56.3 45.1 42.4 39.0 36.3 43.1 quire a similar overhaul of our current Participants model, Townley suggests. 7-17 Years of Age 20.0 22.9 19.7 18.1 17.0 15.1 17.2 “To break this cycle fi nally, shops 18-75+ Years of Age 27.9 33.4 25.4 24.3 22.0 21.2 25.9 need to become consumer-centric. Percentage 7-17 Years of Age 41.8% 40.7% 43.6% 42.7% 43.6% 41.7% 39.9% Th ey need to break the pattern of white Percentage 18-75+ Years of Age 58.2% 59.3% 56.4% 57.0% 56.4% 58.3% 60.1% male domination. Put women on staff . *In millions Above all, start hiring for personality,” Source: National Sporting Goods Association he said. www.bicycleretailer.com Bicycle Retailer & Industry News • April 1, 2007 43